Financial institutions have stepped up credit support for businesses impacted by the ongoing West Asia conflict, with loans sanctioned under the Emergency Credit Line Guarantee Scheme (ECLGS) crossing ₹35,000 crore.
The scheme is designed to provide liquidity assistance to sectors facing operational and financial pressures arising from the geopolitical situation.
As per PTI news reports, as of 29 May 2026, lenders had approved around 80,000 applications under the scheme, sanctioning loans worth ₹35,194 crore. During the same period, guarantees amounting to ₹15,720 crore were issued to support the credit extended to eligible borrowers.
Providing an update on the programme, Manoj Muttathil Ayyappan, Joint Secretary in the Department of Financial Services, said, "Since we have reached a good number, it is expected that the customers would benefit from the scheme."
Ayyappan noted that the application process is fully digital and can be completed within 5 to 7 days from start to finish. He also stated, "The scheme is made generally liberal, ensuring that maximum beneficiaries are able to avail the benefits."
Approved by the Union Cabinet on 5 May 2026, ECLGS 5.0 aims to facilitate additional credit flow of ₹2.55 lakh crore across affected sectors. The programme includes a dedicated allocation of ₹5,000 crore for airlines dealing with the impact of the ongoing crisis in West Asia.
The scheme has an outlay of ₹18,100 crore and seeks to provide timely liquidity support to businesses, helping them maintain operations, preserve employment and ensure continuity in domestic production activities.
A nationwide outreach initiative is also being conducted to increase awareness and participation among eligible borrowers.
Under the framework, banks can extend additional credit equivalent to up to 20% of an eligible borrower's existing working capital limits. For airlines, support can reach up to 100% of peak credit exposure, subject to a maximum of ₹1,500 crore.
Institutions covered under the scheme can access up to 20% of fund-based working capital facilities, capped at ₹100 crore. Borrowers classified as SMA-2 as of 31 March 2026 are excluded from the programme.
The credit guarantee mechanism provides 100% coverage for MSMEs and 90% coverage for non-MSMEs through the National Credit Guarantee Trustee Company Limited (NCGTC), helping lenders manage risks associated with additional financing.
Airline borrowers can avail loans with a tenure of seven years, including a moratorium period of 2 years. For MSMEs and non-MSMEs, the repayment period extends to 5 years, including a 1 year moratorium.
The support package was introduced as MSMEs and airlines continue to face financial challenges linked to the West Asia conflict, which began in February 2026. The objective is to address short-term liquidity pressures while maintaining resilience across affected sectors.
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With more than ₹35,194 crore already sanctioned across around 80,000 applications, ECLGS 5.0 is emerging as a key credit support mechanism for businesses affected by the West Asia crisis. The scheme aims to improve liquidity availability while supporting business continuity and employment across multiple sectors.
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Published on: Jun 2, 2026, 1:14 PM IST
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